New York’s factories in fresh fall

I am City A.M's deputy editor, having joined the newsroom in late 2010 as an economics reporter.

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Julian Harris

AMERICA’S economic prospects took a hit yesterday, as it was revealed that New York state’s factory sector contracted for the third straight month.

The Empire State regional manufacturing index worsened to -7.7 this month, down from -3.8 in July.

“The index has now been below zero for three months in a row and, in falling from 21.7 in April, it illustrates the extent and speed of the recent slowdown,” commented Paul Dales of Capital Economics.

Most worryingly, the forward-looking sub-indices plummeted across the board.

“The future general business conditions index plummeted twenty-four points to 8.7, its lowest level since February 2009,” the report said.

“Future new orders and shipments indexes, while positive, fell to near-record lows, exceeded only by their September 2001 readings,” added the New York Federal Reserve, which compiled the data.

The results are ominous for the US as a whole, according to Dales. “A weighted average of the five most important components of this survey is consistent with the national ISM manufacturing index falling from 50.9 in July to the boom-bust level of 50 in August,” he explained.

“It’s worth pointing out that the ISM needs to drop below 46 before it’s consistent with a recession. Although we still think a recession will be avoided, there is little doubt that economic growth has remained weak.”

Confidence among builders of new American homes has remained low in August, according to a separate survey released yesterday by the National Association of Home Builders (NAHB).

The index stuck at 15, showing that far more builders rate conditions as “poor” rather than “good”.